Ethereum is the community-run technology powering the cryptocurrency, ether (ETH) and thousands of decentralized applications.
What is Ethereum?
Ethereum was developed as a blockchain network and is a decentralized public ledger for verifying and recording transactions. Users are allowed to create, publish, monetize, and use applications on the platform, and pay with Ether cryptocurrency. Notice that Ethereum find the second place in market value while Bitcoin leads first.
Ethereum was first founded by Joe Lubin and Vitalik Buterin in July 2015 as a technology to send cryptocurrency to others as a fee. Further, it powers applications that all people can use while no one can take it down. “It is the world’s programmable blockchain” says Lubin.
The Ether cryptocurrency was designed according to Ethereum network. Recently, Ether has been an accepted form of payment by some service vendors. Overstock, Shopify, and CheapAir are among the online sites that accept Ether as payment.
Ethereum Business
Although Ethereum was built on Bitcoin innovation, it has some big differences. Knowing that both Ethereum and Bitcoin allow using digital money without payment providers and banks, Ethereum is programmable and it can be used for many different digital assets, even Bitcoin. So Ethereum can go beyond only payments. It actually is a marketplace for financial services, games and apps that cannot steal your data. It could be said that Ethereum was developed to enable users to build and publish smart contracts and distributes applications (dApps) with no risk of downtime, fraud or interference from other.
Projects Based on Ethereum
Ethereum platform can be used to codify, decentralize, secure and trade everything. Some projects plan to test the concept.
In a partnership, Microsoft and ConsenSys claimed Ethereum Blockchain as a Service (EBaaS) on the Microsoft Azure cloud. So that they offer Enterprise clients and developers a single click cloud-based blockchain developer environment.
Also in 2020, Advanced Micro Devices (AMD) and ConsenSys accompanied to create a network of data centers built on the Ethereum infrastructure.
Further Evolution in Ethereum
One of the first to consider the potential of blockchain technology for uses beyond the secure trading of virtual currency was the founder of Ethereum, Joe Lubin. ETH cryptocurrency primarily was considered as a medium of payment for apps built on its platform.
Since it is invulnerable to hackers and other snoopers, Ethereum has created the opportunity to store private information from healthcare records to voting systems. Its reliance on cryptocurrency offers posibilities for programmers to create and market games and business applications on the network.
Although a blockchain might be invulnerable to hacker attacks, some have always tried to. In 2016, more than $50 million worth of Ether that was raised for DAO project originating from Ethereum’s software platform. The rubbery was blamed on a third-party developer.
The Ethereum community created a “hard fork” which invalidated the existing blockchain and created a second Ethereum blockchain in order to reverse the theft. The original is known as Ethereum Classic.
On May 2021, Ethereum became the second largest visual currency on the market with 100 million number of Eths. Notice that unlike Bitcoin there is no limits to the number of ETHs that can be created.
Currently, Ethereum is waiting for an upgrade as Ethereum 2.0, which allows networks to improve congestion problems which were met in the past. Actually, Ethereum is tended to be a platform to all kinds of applications for safe storage of information.
Criticisms of Ethereum
Like all other cryptocurrency platforms, Ethereum also faces few criticisms:
- Prices of Ether, like all other cryptocurrenciestend to mirror bitcoin price action for years as it is front and center at present. For example, in 2017, bitcoin’s value was between about $900 to $20,000. In April 2021, bitcoin reached around $63k. However, it decreased later to $30k.
- All these networks consume a vast amount of energy. Cryptocurrency miners, in particular, are devoting a huge amount of computing power to the process of validating transactions. One reason for countries such as Chine to crack down on cryptocurrency was the fossil fuel energy drain because of large-scale crypto coin mining operations.
- Also because of its fees Ethereum was criticized. That may change with the introduction of Ethereum 2.0.
Ethereum and Ether
Ethereum is a blockchain database for information that is unhackable. Ether, or ETH, is the cryptocurrency used to complete transactions on the blockchain.
Blochchains are designed as a chronological chain including blocks of data. Therefore, every transaction using Ether coin is verified and recorded as an additional bock on the unique blockchain. As the result, blockchains could be compared to ledger due to the process of recording every transaction in a sequence.
The Ethereum blockchain not only stores transaction records for Ether currency, but also allows software developers to create games and business applications, called dApps, and market them to users. Such users prefer to take advantage of the relative lack of risks that come with storing sensitive information on the World Wide Web.
What Is ETH Trading?
Investors may use different number of cyber currency trading platforms to buy and sell Ether. The current choices include Coinbase, Kraken, Bitstamp, Gemini, Binance, and Bitfinex. Investing apps like Robinhood and Gemini also allow cryptocurrency trading.
As we already mentioned, crypto prices are extremely changing over time, and the people who trade them are trying to capitalize on that changes. The value of one ETH was trending between $1,800 to $2300 in July 2021. It was above $4,000 in May, but only $231 a year before.
Ethereum or Bitcoin?
Unlike the Bitcoin blockchain, which was created to support one cryptocurrency, the Ether cryptocurrency was created to provide an in-house currency for applications using Ethereum blockchain. In other words, Ethereum wants to be a platform for all kinds of applications that can store information safely.
Despite their differences, Ethereum and Bitcoin both are the creators of virtual currencies that rival in the investing world. These virtual currencies are merely coins that have no physical existence but are represented by a string of codes that can be exchanged at a price agreed upon by a buyer and a seller.
How Ethereum Make Money?
Users pay some fees to make use of dApps on the Ethereum platform. These fees, or gas, vary depending on the amount of computational power used. According to the Ethereum Gas Report, the average fee for gas was above $10 per transaction in early 2021.
Mine One Ethereum
The time it takes to mine Ethereum and receive Ether mining rewards directly depends on the power consumption, cost of electricity, and any fees paid to a mining pool and/or hosting service related to the mining operation. Therefore, profitability and increases in mining difficulty targets and the overall price performance of the crypto market are also related to those factors. Based on the calculations of Ethereum mining calculator, mining one ETH will take about 51.8 days.
Considering the risk and high charges to mining Ether, this article is not a recommendation by Investopedia or the writer to mine cryptocurrencies or ICOs. Individuals always should consult professionals before making any financial decisions.
